After RBI's new CRR norm, fund houses have witnessed huge outflows from debt funds, especially from liquid funds, in the recent past.

Debt funds remained attractive for investors despite Reserve Bank of India's new norms on cash reserve ratio (CRR) as fund managers are of the view that returns will definitely be better in coming days, especially in short-term debt funds category.

Apart from short-term gilt funds, long-term gilt funds and liquid funds among others are likely to give better returns and investors could put money in them as market participants see RBI's move on CRR as a temporary measure.

In a recent notification, RBI has asked banks to park all incremental deposits garnered between September 16 and November 11 with it as CRR to suck out huge liquidity. This has resulted in huge outflows from liquid and money market funds.

"Things are almost settling down. Investors understand that the move of RBI is a temporary measure to suck out excess liquidity in the system," Chief Investment Officer of Sundaram Mutual Fund, Dwijendra Srivastava told International Business Times Thursday.

He also said this move should not be seen as a negative move on mutual funds as RBI is likely to follow the path of monetary easing going ahead.

Post banning of high value currencies, banks have seen surge in deposits to the tune of more than Rs 8 lakh crore as of now. Excess deposits with banks have prompted banks to park their money in liquid funds for better returns.

However, new CRR rule of RBI have led to huge outflow of funds as banks pulled out money to comply with the new norm.

"This was the surplus money which was never in the system. It was just a momentary inflow. So, fund industry is not likely to be affected due to this move," Jimmy Patel, Chief Executive Officer of Quantum Mutual Fund told IBT.

He also said that investors should park their money in short-term funds as likely fall in bond yields would give better returns in the near-term.

As things will take one-two quarters to stabilize, short-term debt funds are better placed to give higher return than any banking instruments like fixed deposits, Patel added.